SWITCHING super funds may seem like a good idea to some, but is it worth the hassle?

> GEN Y - Justine Davies

SHOULD you switch super funds? Maybe, maybe not, but the absolutely essential thing is to simply take an interest. In particular, be aware of the returns you are receiving and the fees involved.

The opening statement of a recent policy brief by The Australia Institute sums it up nicely: "Australians spend more money each week on superannuation fees than they do on electricity, yet only a small portion of those with superannuation pay close, if any, attention to the decisions made on their behalf by their super trustees".

But gee, don't we love to complain about the cost of electricity!

A 25 year-old on an average salary, working to age 60, could pay about $250,000 in fees on their super fund if their fund charges 2 per cent a year.

They could reduce that cost by more than $100,000 by selecting a fund which only charges half that amount.

Then there is the return. That same 30-year-old, in a fund earning 6 per cent a year on average, will end up with about $100,000 less than being in a fund earning an average of 7 per cent a year.

Superannuation is a $1.4 trillion industry that is predicted to grow to a $5 trillion industry over the next 20 years.

That's a phenomenal amount of money and you should absolutely ensure that you receive your fair share of it at the end of the day.

* Justine Davies is finance editor and commentator with financial research and ratings firm Canstar.

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> GEN X - Bruce Brammall

HEY, just how bad can a super fund be? Believe me, you have no idea.

Some super funds from the '80s and early '90s are nothing short of criminal. Yes, criminal. I'll go one step further. Some '80s superannuation executives should be awaiting their final meal on death row for crimes against their customers, a la Sean Penn in Dead Man Walking.

Think I'm kidding? How about locking customers in to management fees of 7 per cent-plus, then overhanging that with HUMUNGOUS exit fees in case they try to leave. El bastardos!

There is no justification for it. These funds still exist and are largely run by household name institutions. So, yes. Some people must change their super funds.

Gen Xers will, largely, have escaped these death funds where you literally can't get ahead because of the fees you're paying.

Obviously, you don't switch funds just for the sake of it. What should you consider? Fees, sure. Low-cost fund options that will provide you access to the investment options you need.

More importantly, make sure your super fund has the insurance you need, particularly life and total and permanent disability insurance, to protect yourself and your family in case the unthinkables occur.

Xers should consolidate unnecessary funds, but not before insurance has been considered. Go ahead and do it. But if you don't know what you're doing, make sure you get a reputable financial adviser involved.

THIS depends on several factors, including what you're paying in fees.

Let's assume we have two people who earn $70,000 a year. One is in a super fund that charges 0.75 per cent in fees and the other has a fund that charges 2.5 per cent in fees. Both start with a zero balance, contribute the compulsory 9 per cent, and are earning 5 per cent a year. After 40 years, the person with the 0.75 per cent fee ends up paying $87,000 in fees. The person with the 2.5 per cent fee ends up paying $287,000.

So pull out your statement and look at what you're paying. Most super funds charge an administration fee, but then there are other fees such as investment management fees, membership fees, contributions fees, etc. So know what you are paying, and how much it's costing you.

If you find a fund that has low fees and satisfies your needs, ask them to go out and find all the super contributions that you've made over your working life.

Most funds will do it for free and it's a good way to make sure you have access to and control of all your super.

There are lots of stats out there but at last count there were about 3.4 million lost super accounts here in Australia, so there is a good chance that you have at least one - and you're paying fees on it.

So to ask if switching funds is worth it, I'd say absolutely. And if you have no idea what your fees are, then now is a good time to find out. If you don't know where to start, ask an adviser to help.

* Mark Bouris is executive chairman of advice firm Yellow Brick Road.

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> RETIREES - Kerrin Falconer

IN THE world of Goldilocks and the three bears, the chairs were too hard, too soft or just right. The porridge was too cold, too hot or just right and the beds, well, you know ...

So it is with many super fund account holders. Some check their balances daily or even hourly. Others hardly check at all and some seldom take note. Super for retirees is often their only investment vehicle and the investments contained within it are the source of important regular income payments.

The global financial crisis gave super a bad name but it is merely a tax structure, and it is the investments within super that are the key to returns. Before jumping ship from a super fund, account holders may do better and be like Goldilocks and keep searching to find what it is they want.

Maybe shares and property are too hot, cash is too cold and it may need the right combination of assets to be just right.

Research firm Rainmaker says super funds are set to give the best returns in 16 years, mainly due to the performance of the share market. However, only 54 per cent of funds achieved the benchmark of returns that beat inflation by 2 per cent - that is, a return of about 5-6 per cent.

Goldilocks persevered to finally get what she wanted - a pleasant chair, tasty porridge and a comfortable bed. She found what she wanted in the same house. If your fund is one of the 46 per cent that hasn't achieved this benchmark over a reasonable length of time, then you may need to be unlike Goldilocks and choose a different house.

* Kerrin Falconer is a finance writer with 15 years of financial planning experience.

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